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Thursday, October 26, 2023

Court Rejects Challenge to City's "Shared Housing" Ordinance

The City of Chicago allows the owner of a two to four unit residential building to rent out a unit as a short term rental provided the building is the owner's primary residence. An owner who does not primarily reside in the building can request an "adjustment" from the City if the owner can establish certain factors. An owner of multiple residential buildings who received an adjustment for one building but was denied other adjustments in another building sued the City on several grounds, including arguing that the City ordinance was unconstitutional. The case made its way to the Appellate Court which ruled in favor of the City in Henderson v. City of Chicago.

The Appellate Court first rejected the owner's argument that the Ordinance was unconstitutional because it it required owners to provide sensitive or personal financial information in order to demonstrate a financial burden, in violation of the privacy clause of the Illinois Constitution. Second, the Court held that the Ordinance did not constitute an unreasonable property seizure under the federal or state constitutions, finding that the stated purpose of the Ordinance (to limit the number of shared housing units to reduce the burden or nuisance on neighboring residents) was a rational means to achieve the City's purpose. Third, the Court rejected the owner's argument that the investigation by the City to discover noncompliant rental listings was a warrantless search in violation of the constitution, finding that the owner did not meet his burden of showing how an electronic search by City investigators violated his constitutional rights. The Court also upheld the City's imposition of fines in the amount of $5,000 for the owner's failure or refusal to remove unregistered rental listings.


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